Around 5000 companies across the nation have to justify GST transition credit.
In lieu of a letter furnished by the Central Board of Excise and Customs (CBEC), dated 11th September 2017, the indirect tax department kick-started its investigation spree.
The Chief Indirect Tax Commissioners needs to verify all transitional credit claims of and beyond Rs 1 crore.
Point of Contention!
On the failure to either reply or furnish details, tax penalties are levied.
What are Transitional Credits
Transitional credits are tax credits apportioned before the advent of the Goods and Service Tax.
It is the accumulation of an excess of the input over the output tax credit before 1st July 2017 on the pre-GST stock.
What initiated this drive
The tax authorities suspected some misusing of certain provisions under the nascent GST due to the following:
Owing to such irregularities, CBEC has made genuine attempts to nip any loopholes for tax evasion by duly checking the eligibility of credits under the GST regime and by matching the credit claimed with the closing balances of the returns filed under different laws before GST.
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